I am 33 years old, I currently earn only $ 120,000 a year, which includes an annual bonus, and my company gifted me to the firm with about $ 300,000 in equity, even though our stock is brand new, so it is constantly hovering up and down. I put about 6% towards 401 (k) and another 4% towards personal savings, investments and emergency cash.
As far as debt is concerned, I have about ,000 35,000 student loan, $ 5,000 credit-card loan, and $ 16,000 personal loan. I don’t have car payment. I help my 12 year old partner partly because his business is, sadly, failing, but he won’t leave the business. So, some part of my income helps him to pay the bills and expenses.
The big question is, will I sell my company’s equity to pay off my debt? Or, can I continue to repay my debt and let my stock grow? I understand that I have to pay some fairly large taxes because of the stock gains, so I have to factor it into sales as well. Thank you so much for your input, and thank you for your column.
Debt with equity
You have come a long way in a very short time. In the United States, the average salary for your age (25 to 34) is around $ 50,000 a year, so you are professionally punching your weight and with a 12 year relationship under your belt you are personally ahead in the game, and definitely living your best life. You don’t have to pay for the car, which is a plus. So far so good.
Before I consider your answer, I will offer you the first of two unsolicited advice and emphasize the importance of living your way. If only we could take that advice to heart! We are all guilty of tearing apart – sometimes responsibly – from time to time. Your student-loan debt is obviously well-spent, and your personal and credit card debt makes up a small proportion of your total debt.
That said, it’s important to clear your credit card debt every month and – if possible – avoid paying interest on a personal loan. If you collect the same amount in the future, there is no point in repaying your loan. The biggest lesson from this should be to go back to black instead of using your monthly income vs. your stock options.
“Your student-loan debt is obviously well-spent, and your personal and credit card debt makes up a small proportion of your total debt.“
Before selling stock, it would not be wise to consult a tax advisor. Timothy P., a tax partner in the practice of personal wealth advisors at Ezner Advisory Group LLC. Space said equity compensation rewards are usually subject to a general income tax for services provided.
“If you were to be awarded the prize in 2022, the local tax, employment tax, and a federal graduate before additional consideration and other information, the combined state rate could be approximately 40% (or more). You need to confirm and monitor whether you have to pay some fairly large tax due to any potential profit on the current or future sale of the stock, ”he said.
“Your debt level of $ 56,000 is manageable considering the value of your total income and assets; however, you should review the interest rate on the loan and consider reducing these amounts, especially where interest rates – and interest expenses do not appear to be tax deductible.” More than the return on investment of your assets, ”he said.
And now for the second part of my unsolicited advice: talk to your partner about his plans for business. You want to balance your support of his dream with the cold reality of business efficiency. You may need to hire an independent, third party consultant to help you navigate your partner’s approach to the business. You want to help him make the right decision.
“You continue to show yourself the sympathy that your partner and his business show, but bring the same critical vision to each endeavor. This will help both in the long run. “
Sometimes, it’s hard to give up. But doing so could result in the business being sold, a new business partner being listed, a co-investor or even starting a new venture, adding space. “Considering these tips, it is important to save your own income and assets. If the business closes, you can still help him pay his bills and expenses. ”
The good news: your debts are manageable and you don’t have to sell your company’s stock, something you may regret later, but you also have other issues to deal with, such as stress, such as your partner’s business and your commitment even if you have them. Don’t have enough money to pay off but avoid even small loans.
You continue to show yourself the sympathy that your partner and his business show, but bring the same critical vision to each endeavor. This will help both in the long run. Sometimes, it’s something you leave on the floor of the cutting-room – in this case, what you asked No. Ask in your letter – it can provide the clearest perspective and ultimately the most enlightening proof.
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